Inside Watsco’s Phenomenal B2B Growth

The air conditioning giant needed a cool B2B solution.

When your air conditioner breaks down in the height of summer, it can feel like the end of the world. But thankfully, a professional is never far away, who can order the right part, install it, and leave you feeling chilled out once again. The HVAC industry (heating, ventilation and air conditioning) is ripe for a digital transformation to help its contractors do their jobs more efficiently, carrying out more repairs, installing new units, and of course, selling more parts to generate more revenue.

Supporting HVAC contractors is the central mission of Watsco Inc. Founded in 1947 as a tool and supply manufacturer, the Florida-based company has become the largest distributor of HVAC and Refrigeration equipment and supplies in the United States. Comprising over 5,000 employees in more than 500 locations across the US, Latin America, the Caribbean, and Canada, Watsco began its digital transformation journey in 2013.

Core to the success of the company is the independent structure of their four business units: Carrier Enterprise, Gemaire Distributors, Baker Distributing, and East Coast Metal Distributors. The same strategy they used to grow their traditional sales channel was replicated digitally, allowing Watsco to experience unprecedented growth through their eCommerce sales channels with online sales in 2017 exceeding $900 million – that’s 50 percent year-over-year growth.

“The goal was to find a platform that had a large community of resources to draw from, was capable of enterprise-level order volumes, was backed by a leadership team with a solid industry reputation and a passion for driving innovation, that could be integrated cost effectively. Magento matched all of these criteria.”

Paul McCluskey

Director of eCommerce, Watsco

With Magento, B2B commerce is a breeze.

In partnership with Magento Strategic Partner, Perficient Digital, and with the UX expertise of the design and strategy firm, Gravity Department, Gemaire launched the first Watsco eCommerce site in 2014. “Integrating eCommerce into a large, complex operating business with more than 90 locations, 25,000 customers and a team of over 1,000 employees, across 10 states, was a daunting task. The open nature of Magento allowed Gemaire to integrate existing systems and organizational processes in a way that wouldn’t be possible on other platforms. “Thanks to our ability to innovate on top of the Magento architecture, Gemaire was able to grow its online business by 66 percent in 2017,” said Andre Zdanow, Vice President of eCommerce at Gemaire.

Watsco’s distribution company, Carrier Enterprise, embodies the entrepreneurial spirit that is at the heart of the business. Its team is always ready to embrace new sales channels to further grow the business. Ed Gaffney, President of eCommerce at Carrier Enterprise said: “A holistic, cross-functional transformation is occurring across Carrier Enterprise as we strike a balance between a digital and non-digital customer experience. At Carrier Enterprise we have embraced the agility offered by the Magento platform as we weave technology into every touchpoint, and respond to customer feedback through quick iterations, while rapidly improving the overall experience. Magento, at the core of our B2B transformation, has increased sales and further strengthened our relationship with our customers.”

In 2017, another of Watsco’s companies, Baker Distributing, enjoyed a 100 percent increase in customer adoption of their eCommerce offering. Their customers leveraged the platform to improve their procurement process. “At Baker Distributing we recognize that we are a key component to the success of the businesses we serve,” says Terry Taber, Director of eCommerce at Baker. “Our investment in technology solutions leveraging the Magento platform allows us to offer our customers flexibility and greater control over their procurement processes. Not only does customer adoption of our eCommerce tools make their businesses more efficient, but Baker gains efficiencies that in turn allow us to provide more value and better service.”

The Future is Bright

The digital transformation of Watsco’s businesses has just begun. They are riding a wave of massive opportunity. The brand’s individual business units are now able to build on the strong foundation provided by the Magento platform, to innovate within their unique environments. And a number of initiatives are currently underway to further personalize the customer experience: Watsco is leveraging machine learning and business data to automate product curation, while innovating new technologies to further streamline their customers’ product procurement needs.

Chris Johnson, Director of eCommerce at Watsco’s East Coast Metals Distributors, said: “Working together within the Watsco team, and leveraging the well-informed Magento community, we are building next-generation digital tools that augment our customer’s ability to manage and operate their businesses more effectively. Our digital growth is helping to foster long-term partnerships between East Coast Metal Distributors and our respective customers.”

The partnerships that were established in 2013 are as strong as ever. The Watsco group continues to leverage Magento Commerce, Perficient Digital, and Gravity Department, to complement their growing internal teams. They’re currently preparing for an upcoming release of an improved experience for the Baker eCommerce platform, leveraging Magento Commerce 2 and its B2B module. Director of Development at Baker Mitchell Cowie said: “Magento Commerce 2 provides an exciting opportunity to grow our business in new and innovative directions. The addition of a B2B module and the opportunity to embrace the latest in online innovations will allow Baker Distributing to respond to the changing demands of our customers and remain on the forefront of the technology revolution that is happening within the B2B distribution space today.”